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Collective investments

If money were chocolate, then collective investments would be the selection boxes. There are many types to choose from, depending on your risk appetite, your preferences and what you fancy investing in.

The idea behind collective investments is you pool your money together with others to buy a portfolio of stocks and shares. The advantages for inexperienced investors are clear; instead of focusing on one company, your fund buys a large larger variety of investments. The result, your money isn't exposed to too much risk

How it works

Collective funds, known as unit or investment trusts, take millions, sometimes billions of pounds and use it to buy a basket of shares. Only the very wealthy could ever diversify their investment portfolio as much. Generally speaking, the more investors in a fund, the larger the variety of investments.

What do they invest in?

Sectors, like retailers or technology, natural resources like oil and gas, loans to companies or governments, or commodities such as gold, sugar or frozen orange juice. Some apportion the investment by region, such as UK growth funds, Europe, the US and Emerging Markets. Each collective investment is different, and some will suit your needs better than others.

How do I choose?

To make collective investing easier, a number of facilities are available: Collective Funds, Fund supermarkets, Fund of Funds and Manager of Manager.

The main types of collective investment are:

 

  • Unit Trusts – which invest in a selection of shares and other assets, to create a portfolio. This is divided into individual units, which can be bought and sold by investors.
  • Open Ended Investment Companies (OEIC) –these are also pooled investments, but as an investor, you'll be issued shares instead of units. A single price is normally quoted for buying and selling.
  • Investment Trusts – companies quoted on the stock market, which buy and sell other companies' shares. Investors can earn dividends from the shares, as well as revenue.
  • Exchange Traded Funds (ETF) –private investors can buy into an entire stock market index as easily as buying shares

Will I pay tax on any returns?

If you invest directly into a fund, then your dividends will be liable for tax. However there are products available which offer some tax advantages on your savings:

 

  • New Individual Savings Account (NISA) – The government announced in the Budget 2014 that from 1 July 2014, ISAs (Individual Savings Account) will be reformed into a new simpler product, the 'New ISA' (NISA) with equal limits for cash, and stocks and shares.
  • Life Assurance Based Investments – for higher rate taxpayers and investors with larger sums to invest. Some products allow investors to withdraw funds and pay tax at a later date.

To feel confident that you are investing in a collective investment that is right for you and to understand the costs involved, seek our advice. Based upon your goals and individual circumstances, we can compare funds, sourcing a selection that will suit your needs better than others.

Unit Trusts

Open Ended Investment Companies

Investment Trusts

Exchange Traded Funds (ETF)

New Individual Savings Account (NISA)

Life Assurance Based Investments

 Portlethen Financial Services introduces to St. James’s Place Wealth Management plc which is authorised and regulated by the Financial Conduct Authority

Free Consultation

You can have a free initial consultation. There's no fee, no catch and no obligation on your part.  We can call you to arrange a time that suits you.

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